- The NTA has not published an "X%" benchmark for home-office apportionment (kaji anbun). The rules ask whether the business portion can be clearly separated
- The 50% in Circular 45-2 is neither a cap nor a target. It tests the "main part", and a portion of 50% or less can still be deducted if clearly separable
- Article 96 splits into item 1 (covers miscellaneous income, any return type) and item 2 (approved blue-return filers; real estate, business or timber income)
- The evidence worth keeping is whatever explains why you chose your ratio: floor area, hours of use, whether the space is dedicated, and how your internet line is used
Key points: frequently asked questions
- Q: Is there an official benchmark for the home-office percentage?
- A: Not in the sources checked for this article. Article 96 of the Enforcement Order and Basic Circulars 45-1 and 45-2 ask whether the business portion can be clearly separated. Figures you see online, such as "rent is usually X%", do not come from the NTA.
- Q: Is the 50% in the circular a cap on what I can deduct?
- A: No. The 50% in Circular 45-2 tests whether the main part of an expense is needed for the business. The same circular adds that even at 50% or less, the necessary part may be included if it can be clearly separated.
This article is for people running an affiliate or other side business from home in Japan. It is general, educational information drawn from the law, NTA circulars and NTA pages, not tax advice. For your own income category and how much of any expense you can deduct, check with your local tax office or a licensed tax accountant (zeirishi).
Before asking "how much of my rent?"
Start a side business from home and you will hit the same question sooner or later: what share of rent, electricity and the internet bill can I claim? Search in Japanese and you will find plenty of confident numbers for each.
Here is the short answer. The laws, circulars and NTA pages checked for this article contain no such benchmark. Whatever percentages circulate online, they are not figures the NTA has published.
There is no number to find because the rules ask for something else: a basis for the split. Below we read the key provisions briefly, then turn them into records you can actually keep.
The law asks one thing: can you clearly separate it?
Japanese tax law calls a cost that serves both your household and your business a household-related expense (kaji kanren-hi). NTA Tax Answer No.2210 describes it as a single payment connected with both household and business use.
As a rule, household-related expenses are not deductible. The exceptions are set out in Article 96 of the Income Tax Act Enforcement Order (Shotokuzei-ho Shikorei). In plain English:
Item 1: where the main part of the expense is necessary for business generating real estate, business, timber or miscellaneous income, and the necessary part can be clearly separated, that part is deductible.
Item 2: in addition, for residents approved to file a blue return, the part that is shown, based on transaction records and the like, to have been directly necessary for business generating real estate, business or timber income is deductible.
Both items turn on the same idea: item 1 says the part can be "clearly separated", item 2 says it is "shown". Item 1 speaks of the "main part", but neither item names a percentage. The test is whether the business portion can be distinguished.
What the 50% line really means: it is not a cap
You may have heard that nothing is deductible unless business use exceeds 50%. That comes from Income Tax Basic Circular (Kihon Tsutatsu) 45-2. Read in full, it says something different.
Whether the main part of an expense is necessary for the business (item 1 of Article 96) is judged by whether the necessary part exceeds 50% of the amount paid. However, even where the necessary part is 50% or less, if it can be clearly separated, that part may be included as a necessary expense.
Source: Household-related expenses (item 1) (Japanese) | NTA
So 50% is a line for judging the "main part", and the proviso lets a smaller portion through as long as it is clearly separable.
| Common reading | What Circular 45-2 actually supports |
|---|---|
| Below 50%, nothing is deductible | At 50% or less, a clearly separable part may still be included (proviso) |
| Up to 50% is fine to claim | 50% is a test line, not a recommended ratio |
| Once you pick a ratio, no evidence is needed | Item 1 and the proviso both assume the part can be clearly separated |
How the "main part" is judged is covered by the circular just before it, 45-1: the decision is made by considering, as a whole, the nature of the business and of the expense, the makeup of family and employees, and how the home and other assets are actually used.
For someone working from home, that means which room and which line you use for work, when, and how much. The circular points to actual usage from the start.
Business or miscellaneous income, blue or white return: what changes
Read Article 96 again and the two items cover different people and income.
| Item 1 | Item 2 | |
|---|---|---|
| Who | Anyone (blue or white return) | Residents approved by the tax office to file a blue return (aoiro shinkoku) |
| Income categories | Real estate, business (jigyo shotoku), timber and miscellaneous (zatsu shotoku) | Real estate, business and timber (miscellaneous income is not listed) |
| Wording | Main part necessary, and the necessary part can be "clearly separated" | Part "shown", based on transaction records and the like, to be directly necessary |
| 50% test (Circular 45-2) | Applies, with the proviso | Circular 45-2 is written for item 1 |
If you are an employee whose side income counts as miscellaneous income, you fall under item 1. Because item 1 names miscellaneous income expressly, the logic is the same as for business income: a clearly separable business portion can be a necessary expense.
Approved blue-return filers with business income also have item 2, which puts records front and centre with the words "based on transaction records and the like". White-return (shiro shinkoku) filers with business income use item 1.
Whether your own side income is business or miscellaneous income depends on the facts of your activity, and this article cannot decide that for you. Under either item, what you need in the end is a record that separates the business portion.
Four records that explain "why this ratio"
Translating Circular 45-1's "how assets are used" into a home office gives something like the table below. The NTA does not prescribe these methods. They are examples of records that can explain your split.
| Expense | What can support the ratio | What to keep |
|---|---|---|
| Rent | Floor area used for work vs. the whole home | A floor plan (e.g. from the lease) with the work area marked, plus the area calculation |
| Rent (shared space) | Share of time the space is used for work | A log of days and hours worked (a calendar is enough) |
| Electricity | Devices and rooms used for work, and hours of use | A list of the devices and your work hours, and the formula you used |
| Internet / phone | How the line is actually used for business | Devices and purposes used for work, whether family shares the line, whether you run a separate business line |
An area-based split looks like this (the figures only illustrate the calculation):
Work area 7.5 m² ÷ whole home 50 m² = 15%
→ Keep the floor plan and this formula as the basis for treating 15% of rent as business use
What counts is not the result but the formula and the source documents behind it. If someone asks a year later why it is 15% and your answer is "it felt about right", that is hard to call clearly separated. "Because of this area on this plan" is an explanation.
A ratio is also not set once and forgotten. You move, your hours grow, your family starts sharing the line: when usage changes, so does the basis. Reviewing it once a year alongside your year-end bookkeeping makes it much easier to explain later.
What to do today
That was a lot of law. The practical steps are short.
Most people who get stuck on apportionment are hunting for the right percentage. The rules, though, are not asking you to guess the right number. They ask you to be able to explain the split.
The number can change over time. If the reason it changed is on record too, that record is your basis.
Frequently asked questions
[Disclaimer] OlympTrade is an offshore platform that is not registered with Japan's Financial Services Agency (FSA), so Japan's investor protection schemes do not apply. This article is general, educational content from the Kingfin editorial team and is not tax advice. It summarises published laws, circulars and NTA pages and does not determine any individual taxpayer's income category or deductible amounts. Laws and circulars may be amended. Based on information as of publication (October 1, 2026).
